Reimbursement Report

Living with a Legacy – Reimbursement Barriers Based on Technologies that Came Before

By Elizabeth Brown, MD

Prior “aggressive” tactics of manufacturers launching new technology can poison the reimbursement environment for a related, but distinct technology occupying the same space. This discussion traces the history of two of the most challenging reimbursement environments: wound healing and spine technologies.

Commercialization of any medical device requires consideration of the reimbursement environment in the corresponding therapeutic or diagnostic space. While one would like to think that a technology supported by positive data from a well-designed trial would result in positive coverage, that is often not the case. The frustrating truth is that, at best, the reimbursement environment is characterized by baseline payer skepticism. At worst, the environment can seem hostile, particularly if the technology is entering a space where the payer has had negative prior experiences.

Prior “aggressive” tactics of manufacturers launching new technology can poison the reimbursement environment for a related, but distinct technology occupying the same space. The following discussion traces the history of two of the most challenging reimbursement environments: wound healing and spine technologies.

Wound healing

The challenging reimbursement environment for wound healing technologies dates back at least twenty or more years to the advent of wound healing clinics using autologous platelet cell preparations, which were aggressively marketed without supporting evidence such as randomized trials. In addition, during this time there was a plethora of products that were proposed for wound healing, including such technologies as electrical stimulation, noncontact normothermic wound therapy, and negative pressure wound therapy (NPWT). At their introduction to the market, these devices were similarly not supported by randomized trials. In particular, NPWT was aggressively marketed by suppliers who organized effective grass roots support resulting in widespread overturned payer appeals. Essentially, payers were forced into making a business decision to initiate coverage for NPWT rather than a purely evidence-based coverage decision. This adversarial environment has now bled into other wound care technologies. Skin substitutes are a particularly notable area of controversy. For example, a variety of human dermal allografts with different trade names have been used to treat diabetic ulcers. While these products may vary in the details of their processing, essentially all consist of acellular dermal tissue that is used as a scaffold for wound healing. Payer policies have addressed these allografts individually by their trade names instead of considering them collectively as a commodity. Additionally payers have imposed a very high evidence requirement consisting of randomized trials comparing the allografts either to each other, standard wound care or other bioengineered skin substitutes. This challenging environment is further compounded by the sheer volume of wound care technologies that are often grouped together in a single payer policy. The Anthem policy titled, “Allogeneic, Xenographic, Synthetic and Composite Products for Wound Healing and Soft Tissue Grafting,” addresses 150 products individually by trade name. In general, all of these products are subjected to the same standard of randomized trials. In reviewing this jumbo policy, it is difficult to understand a payer’s interest in addressing these technologies with such granularity, but this is the road that was first established some twenty years ago, dating back to the negative experience with wound healing clinics.

Spine technologies

Similar to wound healing, payers may feel that they have been “burned” by prior spine technologies. Examples include minimally invasive alternatives for discogenic back pain, such as IDET (intradiscal electrothermal therapy) or laser discectomy. These technologies, cleared by FDA through the 510(k) pathway, were not initially supported by results of controlled trials. The technologies were aggressively marketed by manufacturers and payers responded by issuing negative coverage policies. Payers were able to maintain these policies despite the considerable push back from providers and manufacturers, requiring considerable administrative dollars for payers to manage the appeals process. This created the initial adversarial coverage environment. Percutaneous vertebroplasty (PV) is a minimally invasive technique for the treatment of vertebral body fracture, a completely different indication than discogenic back pain. However, PV inherited the same adversarial reimbursement environment. In the absence of randomized studies, payers responded with negative coverage policies, and a pitched battle broke out between payers and PV advocates. Similar to NPWT, payers ultimately conceded to the grass roots support and began covering PV, but the experience left a bitter taste. The positive coverage appeared to be a defeat for evidence-based medicine, particularly when two small randomized sham-controlled Australian trials did not report positive results.

A variety of fusion technologies then entered this heightened environment of payer skepticism. Payers have been reluctant to cover different surgical approaches to a standard fusion procedure, even though the therapeutic component of the overall procedure, i.e. the fusion itself as opposed to the access, involves standard surgical principles. In reviewing these policies, one has to wonder why payers are devoting the time and resources to tightly managing the access component of an otherwise standard fusion. The answer lies partially in the overall reimbursement environment of the spine space itself. Likewise, artificial discs have been subject to this same phenomenon. The pivotal trials consisted of noninferiority trials comparing artificial discs with standard fusion techniques. Payers responded negatively to this trial design, stating that the control fusion group was a flawed gold standard since it had never been proven superior to conservative treatment in a controlled trial. This rationale essentially created a double standard of accepting fusion as the gold standard, but requiring that artificial discs meet a higher level of evidence that the covered gold standard fusion would not meet.


Understanding the reimbursement environment is a critical exercise when planning the commercialization of a medical technology. Unfortunately, this environment is influenced by more than just clinical data. Payers’ negative experiences with prior technologies in the same space can implicitly raise the payer evidence requirement. Manufacturers should anticipate skepticism (healthy or otherwise) within the payer community when launching new products, particularly in these areas of medicine. Understanding the history of technologies that have come before, and identifying ways in which to avoid some of the same pitfalls, is critical. As evidenced above, this may not always be possible. However, the more new technologies can be differentiated from products in the same space that built support based on limited clinical data, the more successful these new products will be in defying old biases and turning payers’ skepticism into pragmatism or, dare it be said, enthusiasm.

About The Author

Elizabeth Brown